Although the deal terms were not disclosed, once approved (expected by Q4, possibly Q1 2020 at the latest), the acquisition will bring together two leading HR BPaaS providers with highly complementary capabilities and footprints. Once combined, the new Alight organization will have around 14.5k employees, and provide a range of health, wealth, and HR services to >3k clients and ~50m lives globally.

NGA’s impact on Alight’s HR services offering

Currently, Alight has a comprehensive HR services capability, supporting clients with consulting, deployment, and ongoing support for HR platforms and services, including a managed payroll services offering which processes >24m checks annually.

Alight's payroll services experience dates back to 2004 when it entered the multi-process HR outsourcing space through its acquisition of Exult. Since then, Alight has developed deep expertise in delivering payroll administration services to large, complex organizations leveraging leading HCM platforms, including Workday, SAP, and PeopleSoft. But its payroll capability has geographically focused on North America and the U.K. and it has lacked multi-country payroll capability.

With NGA HR, Alight will gain major multi-country capability, expanding its presence and delivery capability, particularly in Europe and Asia Pacific, and notably in Latin America where Alight lacks a local delivery center. Additionally, NGA HR brings its euHReka and hrX platform technology.

While the crown jewel from the NGA HR acquisition is certainly its global payroll capability, it also brings to Alight a very complementary HR BPaaS offering, with an aligning consult-to-operate model designed around major cloud HCM platforms including Workday and SuccessFactors.

While both organizations currently maintain partnerships and support clients on these cloud platforms, Alight’s expertise and client base has slanted heavily toward Workday. Alight has a partnership with SAP SuccessFactors, but has historically not taken on deployments of the HCM platform, choosing to focus only on post-deployment services instead.

Conversely, NGA HR brings to Alight experience in deploying and operating on the SuccessFactors platform. NGA HR is also a partner with Workday and supports several clients on the platform, but does not currently take on Workday deployments.

With the addition of NGA HR’s SuccessFactors practice, Alight will be able to target and support a much wider set of cloud HCM buyers seeking broader HR transformation, and offer multi-national organizations a truly end-to-end HR BPaaS solution that can support a multi-country payroll spanning 188 countries.

The acquisition likely helps the case for Alight’s eventual IPO, which its owner Blackstone announced it would pursue in late 2018, but placed on hold in March of this year. Although the timeline for revisiting an IPO has not been disclosed, we expect the addition of NGA HR will only serve to boost Alight’s long-term value, particularly once the organizations have fully integrated and are leveraging their combined capabilities.

While Alight is gaining a solid capability boost, NGA HR may be the bigger winner in the deal. As part of Alight, NGA HR will be finally breaking away from over ten years of private equity ownership, gaining a parent company that operates in and understands the HR technology and services industry, and that will invest in and cultivate its capabilities for the long term.

Once the deal is confirmed, the challenge of integrating the two organizations will begin. Both sides are M&A veterans in this space, having navigated mergers and acquisitions multiple times throughout their histories. This, combined with the highly complementary nature of each provider’s portfolio of services and existing footprints, should enable a successful transition.

While the two organizations will operate as separate brands for the foreseeable future, re-branding for NGA HR is likely in the longer term, though with a strong brand recognition in key regions such as Europe, it’s more likely we will see a co-branded offering longer term.

Overall, this is a win-win acquisition for both organizations, and combined, Alight and NGA HR create a very competitive, globally capable HR BPaaS offering for companies seeking digital HR transformation through a single vendor solution.